XML 56 R16.htm IDEA: XBRL DOCUMENT v3.3.0.814
Segment Information
 9 Months Ended
Sep. 30, 2015
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]
Segment Information
The Company’s business segments are based on the products that the Company offers and the markets that it serves. At September 30, 2015, the Company had two reportable segments: Epoxy, Phenolic and Coating Resins and Forest Products Resins. A summary of the major products of the Company’s reportable segments follows:
 
•
Epoxy, Phenolic and Coating Resins: epoxy specialty resins, phenolic encapsulated substrates, versatic acids and derivatives, basic epoxy resins and intermediates, phenolic specialty resins and molding compounds, polyester resins, acrylic resins and vinylic resins
 
•
Forest Products Resins: forest products resins and formaldehyde applications

Reportable Segments
Following are net sales and Segment EBITDA (earnings before interest, income taxes, depreciation and amortization) by reportable segment. Segment EBITDA is defined as EBITDA adjusted for certain non-cash items and other income and expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals. Corporate and Other is primarily corporate general and administrative expenses that are not allocated to the segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs not allocated to continuing segments.
Beginning in 2015, the Company has modified the components of Corporate and Other to include certain shared service and administrative functional costs that were previously allocated to the reportable segments. Accordingly, for comparative purposes, the Company has recasted its Segment EBITDA results to include these costs within Corporate and Other for all prior periods presented.
Net Sales (1):
 
Three Months Ended September 30,

Nine Months Ended September 30,
 
2015

2014

2015
 
2014
Epoxy, Phenolic and Coating Resins
$
669


$
878


$
2,026

 
$
2,557

Forest Products Resins
396


469


1,205

 
1,420

Total
$
1,065


$
1,347


$
3,231

 
$
3,977

(1)
Intersegment sales are not significant and, as such, are eliminated within the selling segment.
Segment EBITDA:
 
Three Months Ended September 30,

Nine Months Ended September 30,
 
2015

2014

2015
 
2014
Epoxy, Phenolic and Coating Resins
$
92


$
84


$
265

 
$
241

Forest Products Resins
59


63


182

 
191

Corporate and Other
(18
)

(19
)

(54
)
 
(61
)
Total
$
133


$
128


$
393

 
$
371


Reconciliation of Segment EBITDA to Net Income (Loss):
 
Three Months Ended September 30,

Nine Months Ended September 30,
 
2015

2014

2015

2014
Segment EBITDA:







Epoxy, Phenolic and Coating Resins
$
92


$
84


$
265


$
241

Forest Products Resins
59


63


182


191

Corporate and Other
(18
)

(19
)

(54
)

(61
)
Total
$
133


$
128


$
393


$
371

 




 
 
 
Reconciliation:




 
 
 
Items not included in Segment EBITDA:




 
 
 
Business realignment costs
$
(3
)

$
(6
)

$
(11
)

$
(24
)
Realized and unrealized foreign currency losses
(14
)
 
(17
)
 
(17
)

(21
)
Other
(4
)

(14
)

(33
)

(36
)
Total adjustments
(21
)

(37
)

(61
)

(81
)
Interest expense, net
(84
)

(77
)

(245
)

(230
)
Gain on extinguishment of debt
14


—


14


—

Income tax expense
(1
)

(2
)

(28
)

(17
)
Depreciation and amortization
(34
)

(38
)

(102
)

(109
)
Net income (loss)
$
7


$
(26
)

$
(29
)

$
(66
)


Items Not Included in Segment EBITDA
Not included in Segment EBITDA are certain non-cash items and other income and expenses. For the three and nine months ended September 30, 2015, these items primarily include expenses from retention programs, losses on the disposal of assets, certain professional fees and a gain on a step acquisition. For the three and nine months ended September 30, 2014, these items primarily include expenses from retention programs, losses on the disposal of assets and losses and integration costs associated with the previous integration of Hexion and MPM.
Business realignment costs for the three and nine months ended September 30, 2015 include costs related to certain in-process cost reduction programs. Business realignment costs for the three and nine months ended September 30, 2014 primarily relate to costs for environmental remediation at certain formerly owned locations and expenses from minor restructuring programs.